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Toyota 11, America 9, Us 9, Washington 8, S&p 5, Aflac 5, Melissa 3, California 2, David Deits 2, Trish 2, Talbots 2, Chuck 2, Cargill 2, Mary Thompson 2, Carl Icahn 2, Lind-waldock 2, Mary 2, Melissa Francis 2, Alcoa 2, Larry Kudlow 1,
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  CNBC    The Call    News/Business.  
   Market coverage. (CC)  

    April 13, 2010
    11:00 - 12:00pm EDT  

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what is that? >> that is me and when the little incapital thing disappears you'll see the other thing in his hands. >> two chickens. >> mark, i always get you something chickens on the trip. this particular street in jerusalem is on the line between the muslim quarter and the jewish quarter.
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so, you have a muslim chicken and a jewish chicken and you have peace in the middle east. can you tell which is which? >> is that the way you hold a chicken by the wingtips? >> i guess so. >> wow, i don't know -- >> mark, this is the best chicken picture i ever brought you back. >> well, there was one of the chicken crossing the road. >> yes, there was one -- >> well, there's one thing. there's chickens everywhere, mark. you never miss a chicken. >> chicken is kind of a universal bird, isn't it? you can find chickens just about anywhere you go. i appreciate it. all right, mark, that's for you. street poll we promised jason we would get it in. are you feeling afraid, yes or no? where are the votes so far? >> wow. i am surprised at that. i am surprised at that. okay. >> all right. >> 7 out of 10 say we've gone
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too far, too fast. thank you for watching "squawk on the street." >> i'll see you this afternoon. good morning, everyone. welcome to "the call." i'm trish regan. stocks are lower in response to alcoa's disappointing revenues. whether wall street earning expectations are there and what will happen if those are not met. hey, larry. >> hello, i'm larry kudlow. in our taxing america segment, we'll talk with welt for the common good. they want to repeal the tax and they say they want to pay their fair share. >> and i'm melissa francis, we'll talk live with the ceo of virgin america and get his take and, you guessed it, the baggage fees. we love it. this is "the call" on cnbc.
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okay, well, here you go, not a great way for the earning season to start. alcoa missing its revenue forecast and wall street taking notice here. stocks falling with intel up next reporting after the bell this afternoon. the dow back below 11,000. take a look. but it has been creeping up just a little bit there. we're down 32 off the lows of the session down 0.3% there. s&p 500 also seeing some downside but, again, bouncing off the lows. the nasdaq in the red down 7 points and 25% loss there. oil is falling below that key 83 support level. that's one to take note of today. $82.72 per barrel right now. we want to head over to our pal bob pisani at the new york stock exchange. >> we're overalcoa. disappointment, but the big story is going to be in banks and transports. we'll get jpmorgan on thursday, on wednesday and we'll also get,
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of course, some of the other big names on friday. let's take a look at what's important here. it's very simple here. all about credit quality this quarter. the stocks have run up, particularly the regional banks on expectations that the charge offs and the delinquencies will start leveling off. all those losses will start leveling off and those provisions for future losses are actually going to be declining. as the that's a tall order. here's good news and bad news. the concern out there right now and the naysayers are saying that the charge offs from mortgage rates and real estate is going to remain high and people are going to be disappointed when they see those charge offs. what is going to be helping that fixed income trading has been stellar. this will help the big banks that are engaged in it. the regional banks were cut and sell this morning. some of the big names exactly on these concerns that the credit recovery will be a lot more protracted than people thought and real estate will recover much slowly than people
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anticipated. we'll see what happens. again, we'll start on wednesday. as for the transports, big run ups recently. all running up here and we are expecting to hear about stronger volumes and may even hear about pricing firming up. horrible in the transports in 2009. prices fell apart and stocks ran up in anticipation out here and remember something, the transports have been huge in the last couple months and up almost 10% year to date. s&p up 6%. real attention here. take a look at some of the big names here. csx is up after bottoming out after the brief move in january. that's huge runps here. else where look at the big transports groups. ed wolf had some comments on the transports this morning and he came out and downgraded hub group which is a big logistics company. on price appreciation, also reduced their rating on price appreciation on arkansas best
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and con-way. two big trucking companies that also had interesting price moves to the upside. a lot of smart analysts, melissa, saying we've seen these stocks move up already and maybe they've gone too far, too fast. back to you. >> thanks, bob. what is wall street expecting and what will the reaction be if expectations are met or missed let's bring in tom and also david deits. thanks to both of you for joining us. tom, i know according to taump reuters that analysts are expecting within the s&p 500 earnings to grow 37% versus this quarter last year. now, i know it's a rematively easy comp because we've been in a recession but at the same time, that seems like a high bar. what is your bet that companies are really going to do as well as expected? >> it is a high bar, melissa. but, again, last quarter there were six beats to every disappoint. again, as consumers are coming back and they're starting to spend more money and i think the
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numbers are surely going to be there. as far as advising those that might not hit their numbers, there are very, very few, if any at all. i think it will continue to be positive as the trade numbers put out today very, very positive. consumers are starting to feel more comfortable spending money and that will translate into better earnings. >> david, everybody wants to talk about top line versus bottom line and also looking for revenues to go up by 10%. do you think that's generous or conservative? >> i think the 10% is all right but when you look at the 10% to 30% of earnings it is easy math to realize that those earning increases are sustainable. stock investors look forward, they don't look back. it is critical to see what companies are saying and when you look at a 9.7% unemployment, i'd like to see not what they're saying, but what they're doing. they're not hiring. >> you have a v-shape recovery boom.
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indicator after indicator and you have a steep upward curve and ultraeasy money and what's not to like about this? the tax kick in next year and i know all about that and we'll deal with that when we deal with it. what's not to like? >> larry, you have to pick your spots. again, from an unemployment standpoint, david is right, it is high. there are concerns. overseas the emerging markets, they're through the roof and past prerecession levels and people are starting to spend more money. luxury good sales, again, increasing. technology more and more people and companies are upgrading in those areas. so, if you pick your spots, this momentum is going to continue to and you'll continue to participate. the kudlow market melt up is in full bloom. >> not forever. i'm just saying right in here before the tax man hits next
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year. >> let's pick up on that. not forever. david, at what point do investors start getting a little nervous about the tax man kicking in next year about these washington policies really taking effect on the economy. economists are looking six to nine months out. what does that tell you about the investor scenario in the next few months? >> the taxing situation does not look good, trish. basically we need to get debt at a percentage down to 3.3%. that will require $500 billion of cash flow. we just can't tax the wealthy in america. you have half the people in america are no longer in paying taxes and so they're going to be looking at consumption taxes, back taxes and i don't see how that can do anything good for the economy and, therefore, for the stock market. >> 78% top tax rate according to the tax policy foundation. 78% top tax rate. >> half of americans aren't even paying a tax right now. >> that's the group that has 80%
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of the capital which we need to invest and create business. can i just ask a point. little bit of bearishness. import prices came out today. david deits, import prices are up 0.7% and nobody hardly pays attention to this stuff, they should. the last 12 months to march up 11.4%. contrary to the fed, there ain't no deflation and there might even be a hint of inflation. you have a thought on that? >> absolutely. one of the risks going forward we're going to be in a rising yield environment because the fed will look at that as incipient signs of inflation. they're ending their mortgage securities buy back program, so, as interest rates go up, that's going to put pressure on the stock market because fixed income is going to look more apract tractive and increase borrowing costs and that's a real negative going forward. >> tom, given everything we said so far, how do you play it? >> i think, melissa, again, you have to pick your spots.
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from a consumer standpoint, many great etfs out there. if you diversify. technology is definitely the way to go and if you haven't had that position in emerging markets, you haven't missed the boat. it's going to continue and the vanguard world emerging markets etf with an expense ratio of 2.72%. you can't beat it. >> david, what is your best bet right now? >> telecom and utility. high dividends, great franchises and areas that have lagged this market as a dv defensive play. >> you selling bonds? >> we're shortening up the maturities and preferring treasuries over high yields and the spreads that high yield command over treasuries have sunk to their lowest level since before this chaos started. that doesn't look like a good reward risk right now. >> all the various places in new york, california. i don't want to say new jersey. the governor is doing a good job.
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little greeces, illinois. you have any of that on paper? >> you have to pick your spots, larry. obviously, i don't think this country is going to let california fall into the pacific. at the right yields, those could look attractive. >> it's going to be an imf rescue mission. >> thanks, guys, for joining us. when we come back, a stunning report seeing greed and fraud fueled washington mutual's failure. plus, wealthy americans who want to repeal the bush tax cuts and pay more taxes on their high income trust fund. that's right, more taxes. what a great idea. we'll tell you what behind the reversal of this nurosis that rich people seem to have. you're watching cnbc.
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okay, class is now in session. welcome back to "the call." this is a new little segment i put together. the three hs, hot, high and heavy. today it is devry. the stock is not only hot in the s&p a 00, not only high, it is at an all-time high, folks. the volume, heavy. 270% of the ten-day average. look at that bad boy go. credit suisse goes to outperform from neutral and it gets a $75
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stock, $5 billion market cap and into the private education business. trish, back to you. >> thank you, mr. nesto. a year and a half investigation says washington mutual's failure was triggered by top executives that didn't do enough to stop fraud. mary thompson is on capitol hill. hey, mary. >> hi, trish. effective mortgages with frightening regularity, these were some, but not all of the failed practices. all of this according to a senate subcommittee. here's the committee's chair, carl levin. >> washington mutual securityized loans that were selected specifically for sale because they were likely to go delinquent. without informing investors of that fact. getting them sold became an urgent goal. >> the findings of the senate permanent subcommittee on investigations comes after a year and a half long probe into sub prime securitizations.
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a former chief risk officer at wamu saying that many others facilitated while faulting wamu management for embracing risky lending as a means for generating bigger profits. >> by mid-2005, the focus had shifted again to becoming more of a higher risk subprime lender at exactly the wrong time in the housing market's cycle. >> the architect of that cycle. he states in his prepared testimony that he didn't foresee the severity although he began warning about one in 2005. he also goes on to defend wamu to defend market regulations. he also calls the september 2008 seizure of the bank unfair and claims that thrifts treatment during the financial crisis makes it a victim of all regulators who favor wall street over main street. he writes in his testimony the
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company was similarly excluded for hundreds of meetings and telephone call business between wall street executives and policy leaders that ultimately determine the winners and losers of the financial crisises. in my view, he goes on to say that the actions taken by policymakers reflect a vision of a banking industry dominated by wall street banks. kilnjure will testify later this afternoon and, of course, we will be monitoring that. trish, back to you. >> did the chief risk officer try to stop these bad practices at all? i mean, after all, this was his job. >> he said he got up before a meeting of mortgage sales peoples for washington mutual in 2004 and basically tried to encourage them to take more care with these loans that they were issuing. in addition to that, he asked senior management to take out an ad in "the wall street journal" claiming that wewe going to invest in mortgage lending even though he told senior management
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this will shave some off the bank's bottom line. again, it appears senior management as indicated by his testimony and some other memos embraced a riskier lending strategy. >> mary, a question here. this kilnger defense is very interesting. i don't know enough about it. will it hold water in your judgment? will a sort of i don't know. i didn't know about all this credit risk and all this information and telephoning was going on around me and nobody told me and, now, that's very interesting. how will it stand up when we get criminal or civil lawsuits? >> we don't know anything and what will happen, leaven actually said he will leave that up to the doj. as far as killinger saying he was excluded from all the conversations, he was speaking on what happened during the financial crisis and what regulators were talking about concerning his bank. there was a run up on the bank
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before september $9 billion withdrawn and we had a good strategy about it but because the wall street banks were interested. he is inferring whatever the wall street banks wanted his business and that the regulators actually side would the wall street banks despite his claims that bank had a plan in place to defend itself at that time. >> what about that, mary? is that argument getting any traction? what was the regulator's role in all this? >> it will be interesting on what the regulators will have to say. the levin committee is looking at four different subjects. the regulators are going to be testifying on friday and it's likely that we'll not only hear why they weren't more aggressive in the oversight of washington mutual and other lenders, the practices going on during the housing bubble, why didn't they do more to stop it and whether they were trying behind the scenes to create a fire sale for washington mutual. if that bank went under, tlerm
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sixth biggest bank at that time, it would have dwarfed the insurance base it had. >> who is going to believe this guy? who is going to believe this guy? no one told him nothing? i didn't know. his risk guys didn't tell him. unbelievable. >> if you do believe it, what does that say? how is that an excuse? mary thompson, thank you so much. >> this is the greater full theory. when we come back, rich americans who want to pay more taxes. who are these people and we'll find out and what in the world is behind their dumbo thinking. the ceo of verge america and what he thinks about consolidation and the carry-on fee. aflac is not how do i fit it in my company's budget insurance. aflac is help protect and care for your employees at no cost to your company insurance. with aflac, your employees pay only for the coverage they want or need.
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at the end of the day in sitka, alaska, everyone awaits the return of the fishing boats. ♪ their safe arrival is highly anticipated, ♪ as is something else. a shipment of natural sea salt from cargill,
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essential for preserving the catch. we deliver the salt on precise schedules... and ship it efficiently all along the alaskan coast; saving the fishermen money, and their catch. this is how cargill works with customers. women's apparel maker talbots lost in a forecast improved sales in the current year and the store is revamping its sales to cater to younger women shoppers. right now talbots is trading up on the day by almost 4.25%. 15 even on the trade. warren buffett spoke with nbc's tom brokaw back in 2007 about how ridiculously low his
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tax rate is. >> mine came to 17.7%. that was, that was line 61, no, line 43 is a percent of taxable income plus payroll taxes. 17.7%, the average for the office was 32.9%. there wasn't anybody in the office from the receptionist on that paid as low a tax rate. >> most of his capital gains and dividends. congress, of course, now considering a few things to change the situation in mr. buffet's office. joining us now from the organization of wealthy americans who want to repeal the bush tax cuts and pay more taxes. well, mr. collins, those who have succeeded are the capitale capitalests, if you would. i don't see how you can help the nonrich get rich and how you can create jobs if you keep taxing more and more the capital, the saving and investment. explain that to me. >> well, a lot of our wealth for common good members support
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letting some of those tax cuts expire because they view, they see that we have been tremendouses beneficiaries of tax cuts. a lot of them are business leaders. they actually see that at a certain point if you keep cutting taxes on the wealthy and keep shifting taxes off the top and into the middle, we're essentially going to stop making the investments we need to create a prosperous and healthy society. it's really in our self-interest. >> i appreciate that. i'm not thinking about self-intere self-interest. i'm thinking about the interest of the economy and how to create jobs and capital is our most vital research. without capital you can't have a new strong healthy business that can create jobs. as you go up to the top tax brackets 84% of the capital gains taken by those people. if the capital is absorbing it will never make the nonrich rich
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and never create the jobs we want to create. that's the problem i have with this, john. >> what mr. buffett and them are saying we have a two-tier tax system. where is the revenue going to come from to pay down the debt and make the overdue investments we need to make and things that create a growing economy. not just investment. we had very, very low capital gains tax rates for the last couple decades. that doesn't necessarily guarantee that that's going to go into productive investments, right? i mean, we just lived through a period where there was a lot of speculative investment. so, what i think our members are saying is there has been a tax shift. we cut taxes dramatically not over just the last ten years, over the last 50 years. the middle class pays the same percentage of their income in federal taxes as they did in 1960. it's the same. >> but keep in mind that you have basically half of the country right now not paying any federal income tax at all and it
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seems to me at the end of the day income is income is income and you'll run the risk of destroying incentive to create income if you just keep taxing it as much as you possibly can, chuck. >> well, i think that the changes in the tax system that have reduced the income tax sales down the bottom half. the bottom half of the population earn 3z% of all the. >> income and those are folks paying state and local taxes and property taxes that tend to be more regressive. the only thing that keeps the whole system even remotely progressive is that we have a federal system. our folks are basically saying, look, with shifting the tax off the top on to the middle. off of corporations. a lot of these global corporations paying no taxes into small businesses. >> you can interpret the stats to say whatever you want. governor chris christie was on saying the top 1% paid 40% of the taxes. however you slice the pie, you
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can make the stats say whatever you want. if you represent a new group that want to pay more taxes, who's stopping them? if you mail in a check to the irs, they're going to take it, no matter what. you can give away all your money to the poor, if you want to. why impose that will on the rest of the country? >> look, our folks, i've interviewed them all, some do the option where you can send additional funds to the treasury. we're talking about the structure of the tax system. our folks are saying, look, in the last eight years people with $250,000, the government gave us, borrowed $70 billion to give us tax breaks. if we keep the tax breaks in place, we'll borrow another $800 billion. >> every study, chuck, shows that you're never going to balance the budget by keep raising the top two tax brackets. that's what the tax policy center just said. those guys are not supply siders, they're left of center people. >> everybody says we're not going to be able to close the
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gap. >> i had your colleague on our evening show and he's a trust fund baby. seventh generation. nothing wrong with that. what i'm saying is that when his grandfather started the paper mill, there was no inherentance tax and no capital gains tax. i think the greatest periods of growth will come and i think if you want to reform the tax system, take it to a consumption base tax system so we do not penalize capital and we, therefore, can grow the economy as best as possible. >> i understand your point of view, larry. but, you know what we've done -- we also lived in a period the 1950s and 1960s had an extremely progressive tax system. dwight eisenhower was no socialist. we made investments that were both public and private investments. >> it took jfk to reform some of that and the growth that we have seen in the economy over the last several decades started
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back then when you reduce the income tax rates and that was continued on through reagan. and it strikes me, this is a concern that i have, chuck. when you look at my generation and the taxes that they're going to be facing over the next ten years, it's going to really inhibit the growth of this economy and the growth of income for a group of people that need their opportunity to move up, just as some generations previously have. >> you and i are totally in agreement about that. i have a co-worker who has $100,000 in college debt. so, i think back to my father and the gi bill generation. people graduated from college. we taxed our selves and did things. we did make investments. all the people that i talked to who are very high networth business leaders say, look, you need to have both a favorable climate for investment and you don't want to overtax the top, but we need to figure out where is the money going to come from to make the kind of investments that we made in the '50s, '60s
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and '70s. we are living on oour grandparents infrastructure. >> we have to leave it there, though, guys. thank you, chuck, for joining us. we appreciate it. >> easy to give away a lot of your money when you have a lot of it, i guess. if you're ultrawealthy, it makes it that much less painful. >> stop the double, triple and quadroupable tax on capital. our most valuable research for jobs and growth. that's my point. this whole issue of taxing america is going to continue today on "power lunch." whether we should raise taxes on hedge funds and private equities. another black eye for toyota, this time for one of its long-term champions. the slams the new lexus suv. we'll discuss what this means for the brand. from consolidation to carry-on lcarry hf - carry-luggage fees. the president and ceo of virgin america will join us.
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all right, well kmp back to "the call." i'm melissa francis. let's get you caught up on where the markets are trading right now. s&p 500 trading to the down side about 0.03%. the dow also trading on the down side, almost flat on the session, about 0.10% below that 11,000 mark right now and nasdaq on the down side. a little more than 0.10%.
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european markets getting ready for their close and right now all of them in the down, as well. the cac down by 11 points. lots going on in the airline sector including increased consolidation. of course, charging for carry-on luggage as airlines scramble to find new sources. joining us right now to discuss, we have virgin america president and ceo david cush. first of all, your thoughts on this increased consolidation we're seeing and how that will affect you and your business. >> first of all, i'll say it's good for the industry as a whole where the economic forces wanted to consolidate. you get benefits on the revenue side from greater network penetration, from the cost side from the economies of scale. i'm hopeful for the industry sake that there is another round of consolidation. anything that is good for the
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health of the industry is ultimately good for virgin america also. >> david, let me just ask you. your story is so good and you're experiencing your growth and the department of transportation is out of your hair. tell us about this growth story. you're way ahead of the growth curve. you tell me, how good is it? and how continuous will it be and how reliable is this? >> we will grow our fleet by one-third over the next 12 months and employee base by one-third also. add 500, 600 jobs in. good, sustainable growth and add 30% froegrowth over the next th four years. we sell it at a reasonable price and we have very low production costs and in the end that makes you successful. >> david, i want to ask you about this incident with barney frank he was returning from l.a. and there were two women who were haranguing him about health care reform and some reports
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said they were drinking. have you heard about this and what is your policy on unruly passengers? >> our policy is we don't like them to be unruly and, in general, the job of the cabin attendants to keep control of the cabin and if you wind up with an incident where it makes sense to divert, we will. this incident was blown up a little bit and we got reports from our crew that it seemed to be just a minor, a minor confrontation, things that happen on airplanes all the time. of course, one thing we have going on is with the explosion of social media and with onboard wi-fi that a lot of time these things take a life of their own. >> health care at the center of the debate and i would imagine some very heated feeling on both sides about that. let's move on to our next sort of heated topic here on "the call" that we have been discu discussing at length and that is carry-on luggage fees and what is your policy on that and do
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you actually think it's worthwhile to charge a little extra to bring that second bag on? >> we do not charge for carry-on bags and we will not charge for carry-on bags as long as i'm at the airline. what spirit is doing is very interesting and it's a different model and they have the ultra-low tick lt prices out there and they ala carte everything. they have a very successful and very profitable business model. >> will it work for them. >> i think it will. it is amazing what people will do for a cheap ticket. >> including these two. including these two. there is an obsession on this program with the carry-on thing, david, it goes beyond "the call" analysis. i want to ask you about your pricing for tickets. you have low production costs, are you raising ticket prices? can one raise ticket prices in this market? >> we actually have a good bit
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of pricing power right now. something we haven't seen for the last couple of years. i think as the first quarter results come out you're going to see very good yield improvements and most of the carriers are reporting 15% in the february and march and we're in the mid-20s and what we're seeing is increased demand with lots of supply discipline and that generally raises revenues quite well for airlines. >> david, you know, there was a study out yesterday that says that americans expectations for flying for how, it is really low. they expect to stand in line and for the service to be lousy and expect for the food to stink. what has happened to flying in america right now that has become, you have to admit, not a great experience. >> yes, it's very distressful for me. i have been in the industry for close to 25 years and i love to travel. i love the romance and the excitement of it and i think getting from point a to point b shouldn't be trudgery, that should be part of the
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excitement. that's what we're trying to create at virgin america. we want the experience of being on the airline as exciting and pleasurable as it used to be. a tough business, though. >> is that it? it's the competition? it's the cost that is what has gotten in the way of it being a pleasurable experience. >> it's the airport experience. >> it just starts off bad, right, david? >> gets you off on the wrong foot. airplane is just too hard. >> there is certainly an obsession with cost control in the airline industry that i think sometimes is short sided and sometimes impacts the customer more than it should and hopefully we'll help break that mold and jetblue has broken that mold, also. >> your thoughts on energy prices. >> well, again, we're watching it, it's not as disruptive as it was two years ago. we don't like $82 oil as the case may be. the increases have been gradual and really the spikes and the swings $4 and $5 a barrel per day that are most upsetting to business. >> where do you think it's
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going? >> the fundamentals say lower but all the trading momentum says higher. i generally side with the traders. >> okay, we'll leave it there, thank you so much. >> thank you, very much. still ahead, a double-edge sword for lawmakers trying to slap hedge funds with higher taxes. more troubles for toyota. questions now being raised about the safety of lexus suvs. we'll have the fallout. you still day-trading stocks? yeah. i switched to commodities. there's even more volatility in markets like gold and crude oil, and i can go long or short any time, with no special rules. commodities? yeah, and commodities always have value, unlike some stocks. well, how'd you get started? lind-waldock. call lind-waldock, the premier futures broker, at 800-445-2000 and see if commodities are right for you.
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national car rental knows i'm picky. so, at national, i go right past the counter...
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welcome back, everyone. nokia has unveiled three new cheaper messaging phone models challenging the dominance of rimms blackberry. the stock pretty much trading flat down 0.2%, melissa. >> more problems for toyota couldn't come at a worse time. consumer reports urging customers to purchase the lexus high brid suv due to rollover risks. >> in the test when the vehicle, the gx 460 is pushed to its limits, the rear end swings out wide until the vehicle is almost sideways. if this were to happen in a real world situation and it could lead to a rollover. we're telling people not to buy it until that is fixed.
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>> all right, toyota responded saying we are concerned with the results of consumer reports testing the lexus gx 460 and their suggested buyer recommendation. our engineers construct similar tests and we feel these procedures provide good indication of how our vehicle will perform in the real world. joining us now rebecca director of the auto group for ihs global and thank you so much for joining us. this is a huge blow. a drive an suv myself, the whole reason you get one, you live in a bad weather area and expecting to be safer when conditions are difficult. this is exactly the opposite. how big a deal is it that they issued a do not buy? >> well, thanks for having me, on melissa. i drive an suv, as well. i think this is a combination of just really bad news for toyota. terrible timing. it's shocking that it comes from consumer reports because this is a company and an organization that has been objective in their
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evaluations of toyotas, but very supportive of the brand. they used to give them blanket recommendations and, so, it's really telling that consumer reports had this problem. >> have they been too soft on them in the past and that's the problem and now they're trying to save face and be extra hard on toyota and lexus. >> that's definitely one perspective of it. the fact that consumer reports was giving blanket recommendations was really quite a shock to many in the industry because people were not aware that they do the same thing for honda, too. but they stopped that practice and what this really is about is how does toyota fix this problem on this lexus suv. >> well, rebecca, of course, you're right about the toyota piece. i want to come back about the consumer reports piece. uncritically, why now? did they conduct some lengthy,
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scientific engineering study or is this just politics as they ride the anti-toyota wave in the media? >> you know, larry, i think that's something for them to respond to. the tests that they do is a very common test. i've been on a test track myself with different vehicles and have done this same kind of exercise, this lift off oversteer exercise and common thing to do on a test track when you're checking the dynamics of a specific vehicle. >> didn't they do the same test a year ago? in other words, what changed from a year ago besides the bad press toyota is getting? >> this vehicle is on a new platform and the chassis dynamices and the way that they put together the vehicle has actually changed. >> okay, fair enough. no, fair enough, thank you. >> it has changed. >> i have done some of those tests with consumer reports, it's pretty scary as they spin you around there. fortunatally, we didn't roll over. rebecca, let me ask you, it's
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trish talking. even if this was politics and consumer reports was trying to protect its brand, what does this mean for the toyota brand which has already taken such a severe, severe hit? >> trish, when i heard about this i thought this is as if nike had abandoned tiger woods in his time of need. i mean, it's really, they were the one sponsor that really stuck with him without any caveats and it's very significant. it's terrible timing. it is important to remember that this is correctable, though. it's a fairly easy correction, too. they can change some things, test some things out. but the timing of it is absolutely terrible. >> i just question. i mean, if it were me, there's no way i would buy a toyota right now. i'd be frightened to do so. i'm very concerned about safety. >> they're in totally deep yogurt. i don't know how they dig out of this. >> also, consumer reports has really been the bible and the go-to guide for people,
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especially baby boomers buying their toyotas throughout their lifetime. this is yet another reason to not buy one. >> we have to get out. rebecca, i want to thank you for updating me on the new testing because i didn't know about that. that's a very important piece of information. "power lunch" coming up at the top of the hour. sue herera, what is in store? we have bill ford on the need for america to devalue manufacturing and the industrial sector to make more stuff and the need for the globe to embrace green automotive technology. plus, what is the language of capitalism? we'll ask the ceo of rosetta stone. right fr our special yesterday, twitter is out with its big business plan, but will it work? trish, back to you. >> thank you, sue. when we come back, some important clues about the state of the housing recovery. the call heading into this afternoon trading session.
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welcome back to "the call" with your daily realty check i'm diana olick. executives from the nation's largest banks will tell principal deductions in loan modifications raise serious policy concerns.
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david loman wrote and prepared testimony such programs could be harmful to consumers, investors and future mortgage market conditions. home prices fell in february for the seventh straight month and a new report shows prices down 0.6% month to month and down 7.5% from july of '09. foreclosures, as usual, they cite as the culprit. donald trump trumps carl icahn and gains control of his bankrupt casino. the ruling paves the way for three atlantic city casinos to exit bankruptcy for the third time. go to the blog real realtycheck.cnbc.com. larry? >> thanks. it's still set to happen, but it's being delayed by lawmakers. why? two words. campaign funds. cnbc hampton pearson joins us from washington with more on
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campaign funds. hello, hampton. >> hey, larry. interest is now viewed as the best way to pay for tax break extensions for businesses and individuals. lawmakers have to fill a $30 billion revenue hole and the list of options got a lot shorter after the health care vote. taxing investment compensation rather than income than capital gains could raise $24 billion over the next decade. >> pretty simple. congress needs the money. if you look at the tax extenders that cost money, the democrats have promised to pay for tax cuts and, so this is one of the things that they need to come up with some revenue for. >> tax and carried interest has passed the house three times since 2007, but it's never gotten through the senate. why, you can? leading democrats don't like it. max baucus says it should be used as broader tax reform and carrying interest is a bigger fight of financial reform is proving to be a gold mine for
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democrats and republicans when it comes to campaign contributions from wall street. the longer eer the issue is unresolved the longer the spigot continues to flow. >> democrats and republicans are courting wall street for campaign contributions has played a role and not already having been enacted. >> and according to the federal reelections commission the top hedge fund managers dumped a million dollars in recent years. the managers earn more than $25 billion and among the heavyweight campaign contributors carl icahn, sach capital investors steven coleman. >> the campaign report shows that the hedge funds predominantly give to democrats. however, i am going to ask you if you know anything. last week here in new york city senator mitch mcconnell and senator john cornen, two leading republicans met with a large posse of hedge fund people.
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do we know anything that might have come out of that meeting? >> it makes the greater point here, it is met for both republicans and democrats, number one, wall street is very fertile ground in terms of pursuing campaign contributions and the fact that carried interest has gotten back on the radar screen and that plus the whole registration are the two things that folks care most about as financial reform moves forward. >> hampton pearson, thanks so much. we'll take a quick break and back with the is morning's mark action.
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